For those that have resident owned homes occupied by the ‘lower demographic’ how do you prevent neglect of the home over a number of years? I am renovating homes and spending thousands of dollars per renovation and have a concern that the home will not be maintained and if the resident flees in a few years after ownership it will be destroyed. Do you keep a standard of care clause of some sort for the home and is it enforceable?
Yup, sounds about right. It is a problem.
You can say what you like about the damages (during the lease or after eviction inspection) but –
Enforceable how? Like, “you owe me for all this damage and I’m going to chase you to the moon!” Probably you can obtain a judgment from a court that includes reasonable damage fees. But good luck chasing bad tenants. You can’t squeeze blood from a stone.
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The only standards you can maintain are on the exterior of the homes. What I have found is that by strictly enforcing the exterior maintenance standards it can transfer to owners also maintaining the interiors but not often. This however does begin with choosing quality tenants.
The advantage for me in forcing exterior standards is it maintains the quality of the overall community. It also places a financial strain on home owners that may eliminate the worst offenders.
Your opportunity to insure that homes are properly maintained is when screening applicants. By upping your screening standards you increase your odds of getting responsible tenants. If you own and maintain a trailer park the likely hood is the homes are very low priced and attract the lowest class of tenant. By elevating your standards and stepping up to owning a Community, rather than a trailer park, you raise the price of the homes to a level where you attract higher quality tenants that are more likely to properly maintain their homes.
Preventing neglect of homes begins with screening standards established to meet your future business plans.
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Brandon,
You did not understand the point. I am not interested in receiving money for damages but creating a standard of care so that the homes do not become delapitated over time. I think inspections with a rent to own option would indicate if the person will keep up a standard of care. I also assume that a standard of care can be mandated while the home is in the park. Can repairs be forced if the homeowner does not complete them?
With a rent to own agreement the conditions and responsibilities are dictated by the agreement. Money , duration and responsibilities for repair. As the seller you dictate the repair responsibilities with the idea in mind that if the agreement does not conclude you get the home back. Once the agreement is concluded the new owner is in full control and the community owner can only dictate upkeep of the exterior.
I would be very careful about this approach with “rent-to-own.” If you tack on a lot of fees and threaten to (or end up) rescind the contract due to failure-to-maintain, this looks a lot like predatory lending. Anything involving judgment is going to be a hassle and maybe get you into trouble. (“You have to fix this scratch in the countertop – no I don’t. You put a burn mark in the sink you have to repair that – no I don’t”). By the time you’re done, you’ll be in the same place you would have been (with the tenant leaving in a huff and you get the home back in whatever condition).
It also looks a lot like regular renting but with inspections & maintenance hassle which is the same as regular renting with more pickiness in “ongoing” inspections with the threat of fines & we-ll have-it-done-whether-you-like-it-or-not.
If you want to do it with “regular renting” you’ll find out what your local judge allows once it comes up in court (i.e., during eviction for non-payment). Otherwise you can do and say what you want and if they pay then they pay and if they don’t then you evict. And same goes for rent-to-own.
You can be as picky as you want as long as you have the demand. Of course, it is best to be picky up front if you have the demand. Once you’ve “closed the deal” so to speak you have to “train them” to do things “your way” somehow. If they don’t get with your program, you start over with the next in line.
The thing you have to look out for is being accused of using the “failure to maintain” part of a contract to pressure the homeowner (or resident with “equity” in the home) to bow to your “unfair” demands or be sued for breach of contract.
Renting to someone while you SEE if they are a good candidate for homeowner is not the same thing. “Rent from us for a year and then we’ll see” is not the same as “Rent from us for 5 years and then the home is yours” but then you kick them out in month 6 or 16.